Transcripts For CSPAN Key Capitol Hill Hearings 20150307 : c

only 16 states run their own exchanges. the federal government runs extend his for the remaining 34 states that opted out of setting up their own. the court is expected to rule on the case before the end of the term in june. this is an hour and 20 minutes. >> we'll hear arguments this morning in case 14114, king v. burwell. mr. carvin. >> mr. chief justice, and may it please the court, this is a straightforward case of statutory construction where the plain language of the statute dictates the result. >> mr. carvin, will you please back up, because before we get to a question of statutory construction, as you know, each plaintiff, or at least one plaintiff, has to have a concrete stake in these questions. they can't put them as ideological questions. and we have as four plaintiffs. as to two of them, there is a declaration stating "i am not eligible for health insurance from the government," but there's a question of whether they are veterans eligible for coverage as veterans. >> yes. one of those is mr. hurst who would have to, if i would refer you to joint appendix at page 42, where this is the government's recitation of facts where they make it clear that mr. hurst would have to spend $750 of his own money as a because of the irs rule. mr. hurst was a veteran for 10 months in 1970. he is not eligible for any veterans service because if you've served such a short health services. if you serve such a short -- >> i'll ask the government if they agree that -- >> and i should point out that the government has never disputed this, and i'd also like -- >> but the court has an obligation to look into it on its own. >> that's true, but of course there has been fact-finding by lower courts in an adversarial system. i don't believe the court does its own -- >> i don't think it was ever brought up in the lower court that these two people were veterans. >> if i could just make one further point on this, justice ginsburg. even if he were technically eligible, which he is not, there is an irs rule 26 c.f.r. 1.36b2(c)(ii), which says -- >> ah, yes. >> with the usual clarity of the irs code, making clear that you are only disabled from receiving subsidies if you have actually enrolled in a veteran's health services and it's undisputed that -- >> that's the government that's -- >> mr. hurst did not. >> that's deposition to. and then there were the two women, i think one of them was going to turn 65 in june, which would make her medicaid eligible. >> she will turn 65 in late june. she's obviously subject to the individual mandate well in advance of that. by virtue of the irs rule, she would have to spend $1800 per year for health insurance by virtue of the irs -- >> per year? >> excuse me? >> but you said she will turn 65 in june. >> late june, yes. >> so that takes care of 2015. >> no. right now she is obliged, under the individual mandate, to have insurance. you have to have insurance for 9 months of the year and so as of april 1 -- >> then -- >> she will be subject to the penalty which will be alleviated only by -- >> again, i'll ask the government if they agree with you on that. and then i think for the fourth plaintiff, there's a question whether she would qualify for a hardship exemption from the individual mandate even if she received the tax credit, in which case the tax credits would be irrelevant. >> that's true. again, i'll refer you to the joint appendix at 41. that was the government's argument below. we didn't want to get into a factual dispute about it because we had such clear standing with respect -- >> yeah, but you have to -- >> but you would have to establish the standing, prove the standing. >> well, as -- >> if this gets beyond the opening door. >> fair enough, your honor, but it's black-letter law that only one plaintiff needs standing and for the reasons i've already articulated, both plaintiff hurst and plaintiff levy have. >> ok. i don't want to detain you on this any more but i will ask the government what their position is on standing. >> thank you. returning to the merits, the only provision in the act which either authorizes or limits subsidies says, in plain english, that the subsidies are only available through an exchange established by the state under section 1311. >> if you're going to elaborate on that, i would appreciate your in your elaboration, i've read that, and this statute is like the tax code more than it's like the constitution. there are defined terms, and the words you just used concern a defined term. as i read the definition there's a section, definitions and it says, quote, the term "exchange" means, quote, an exchange established under 1311. and 1311 says, an exchange shall be a government agency, et cetera, that is established by a state. those are the definitions. so then you look to 1321. and 1321 says, if a state does not set up that exchange, then the federal, quote, secretary shall establish and operate such exchange. so it says, "the secretary is to establish and operate such exchange," the only kind of exchange to which the act refers, which is an quote, "an exchange established by a state under 1311." that's the definition. so the statute tells the secretary, set up such exchange, namely, a 1311 state exchange. >> correct. >> and there's nothing else in this statute. >> correct. >> so that's throughout what they're talking about. so what's the problem? >> as your honor just said, it tells the secretary to establish such exchange. >> yes. >> and what 36b turns on is whether the state or the secretary has established the exchange. >> no, it uses the same terminology that it's used in 15 times in this statute, namely, the terminology in the definition is "an exchange established by a state." >> under -- >> that's the phrase. >> well, under 1311, that is the phrase. and if 1311 created some the definitional section created some ambiguity as to whether hhs was establishing a 1311 or 1321 exchange, that is immaterial because 36b does not say all 1311 exchanges get subsidies, it says exchanges established by the state under section 1311 -- >> mr. carvin. >> not established by hhs under section 1311 -- >> mr. carvin. >> so it eliminates any potential ambiguity created by the definitional section. >> can i offer you a sort of simple daily life kind of example which i think is linguistically equivalent to what the sections here say that justice breyer was talking about? so i have three clerks, mr. carvin. their names are will and elizabeth and amanda. ok? so my first clerk, i say, will i'd like you to write me a memo. and i say, elizabeth, i want you to edit will's memo once he's done. and then i say, amanda, listen if will is too busy to write the memo, i want you to write such memo. now, my question is, if will is too busy to write the memo and amanda has to write such memo, should elizabeth edit the memo? [laughter] >> if you're going to create moneys to will for writing the memo and amanda writes the memo and you say, the money will go if will writes the memo, then under plain english and common sense, no, when amanda writes the memo -- >> gosh -- >> but now -- >> you run a different shop than i do if that's the way -- [laughter] because in my chambers, if elizabeth did not edit the memo, elizabeth would not be performing her function. in other words, there's a substitute, and i've set up a substitute. and then i've given i've given instructions -- elizabeth, you write you edit will's memo, but of course if amanda writes the memo, the instructions carry over. elizabeth knows what she's supposed to do. she's supposed to edit amanda's memo, too. >> and in your chambers, you're agnostic as to whether will, elizabeth or amanda writes it. but the key point is here under section 1311, congress was not agnostic as to whether states or hhs established the exchange. it's -- >> well, mr. carvin, if i had those clerks, i had the same clerks -- and amanda wrote the memo, and i received it and i said, this is a great memo, who wrote it? would the answer be it was written by will, because amanda stepped into will's shoes? [laughter] >> that was my first answer. [laughter] >> he's good, justice alito. >> justice kagan didn't accept it, so i'm going to the second answer, which is you are agnostic as between will and amanda, but this -- >> ah, but that's -- >> but congress was not agnostic as between state and federal exchanges. >> yes. that's a very important point, i think, because what you're saying is that the answer to the question really does depend on context, and it depends on an understanding of the law as a whole and whether they were agnostic. i agree with that. so it's not the simple four or five words because the four or five words in my example, it's obvious that elizabeth should edit the memo. it's the whole structure and context of the provision that suggests whether those instructions carry over to the substitute, isn't it? >> we implore you to examine these words in the context of the act as a whole because our argument becomes stronger for five reasons. to respond to justice breyer's point, he says such exchange connotes that it's the same person doing it. but look at the provision on territorial exchanges. it says, territories can establish such exchanges and then it says, "and shall be treated as a state." so -- >> yes, it does. but you say connote. no, it's not a question of connotation. it is a question of denotation. now what does that mean? it means that the federal government, the secretary, is establishing a thing for the state. and what is the thing? the thing that it is establishing for the state is defined as an exchange established by the state. >> to -- >> now, that person from mars, who's literal, which i usually am not, but a literalist, i think would have to read it that way. but if you're not a literalist, well, at least you could read it that way. now you want to go into the context if you want to go into the context, at that point it seems to me your argument really is weaker. >> well, two points. >> the exchanges fall apart, nobody can buy anything on them. you know the arguments. you've read the briefs. nobody can there are no customers. employers don't have to pay penalties as long as they use just people from virginia, but one maryland person comes you know all those arguments. so how does the context support you? >> well, again, under the literalist or nonliteralist interpretation, saying that hhs will establish such exchange doesn't suggest that the state has established such exchange if there was -- >> but the state, if made the -- >> if there was ambiguity in that regard just if i could finish my answer to justice breyer you look at a parallel provision where they use precisely the same language, and they said, "and shall be treated as a state," that language which is notably omitted from 1321 -- >> correct. >> and it's a basic principle of statutory construction that you interpret the same phrases the same way. and it shows that congress knew how to create equivalence between non-state exchanges and exchanges if and when it wanted to. sorry, justice sotomayor. >> take a breath. [laughter] i'm a little concerned with how you envision this provision working. you're saying that the hhs exchange can't be for the state so that it's established by the choice of the state. the choice the state had was establish your own exchange or let the federal government establish it for you. that was the choice. if we read it the way you're saying, then we're going to read a statute as intruding on the federal-state relationship because then the states are going to be coerced into establishing their own exchanges. and you say, oh, no, they can't be coerced, but let's go back to what justice breyer was talking about. in those states that don't their citizens don't receive subsidies, we're going to have the death spiral that this system was created to avoid. states are obligated, insurers are obligated to make sure that in their states, whether they're part of this program or not, that they have guaranteed coverage, that children are covered till they're 26, and that they base their costs on community ratings. so if they have to do that, then costs are going to rise on every insurance plan offered in the country in those 34 states, 3 or 6 of or 9 of your states will have tightened their medicaid eligibility requirements in contravention of the act, so they're taking money by breaking their compacts. they would have to lose all of their medicaid money. tell me how that is not coercive in an unconstitutional way? and if it is coercive in an unconstitutional way, in bond just i think it was last term, we said that is a primary statutory command, that we read a statute in a way where we don't impinge on the basic federal-state relationship. >> this court has never suggested outside the very unusual coercion context of the nfib medicaid that a funding condition somehow invades a state police power. obviously -- >> oh, we did it we said it last year. >> in an nf no, no. in bond, there the federal government was taking away a police power. here, all the federal government is doing is saying you want billions of free federal dollars. that's hardly invading state sovereignty and it's the kind of routine the funding condition that this court has upheld countless times. >> let me say that from the standpoint of the dynamics of federalism, it does seem to me that there is something very powerful to the point that if your argument is accepted, the states are being told either create your own exchange, or we'll send your insurance market into a death spiral. we'll have people pay mandated taxes which will not get any credit on the subsidies. the cost of insurance will be sky high, but this is not coercion. it seems to me that under your argument, perhaps you will prevail in the plain words of the statute, there's a serious constitutional problem if we adopt your argument. >> two points, justice kennedy. one is the government's never made that argument. number two, i'd like to think -- >> sometimes we think of things the government doesn't. [laughter] >> well, i certainly hope you do in this case, but not on this question. what i'm trying to, quite seriously, justice kennedy convey is if this was unconstitutional, then the medicaid statute that this court approved in nfib would be unconstitutional. >> mr. carvin, what would the consequence of unconstitutionality be? very often you have an ambiguous provision, could be interpreted one way or another way. if interpreting it one way is unconstitutional, you interpret it the other way. >> correct. >> but do we have any case which says that when there is a clear provision, if it is unconstitutional, we can rewrite it? >> and that and that -- >> is there any case we have that says that? >> no, your honor. and that was really my point justice kennedy. think about the consequences when of the medicaid deal as being coercive. 22 states have said no to the medicaid deal. that has created a bizarre anomaly in the law. that if people making less than the poverty line are not available to any federal funds to help them with health insurance. >> i fully understand that, but i think the court and the counsel for both sides should confront the proposition that your argument raises a serious constitutional question. now, i'm not sure that the government would agree with that, but it is in the background of how we interpret this statute. >> your honor -- >> it may well be that you're correct as to these words, and there's nothing we can do. i understand that. >> there are many -- >> a, there's no savings construction to echo justice scalia's point, but, b, the point i want to make on the straight-up constitutionality is, if this is unconstitutional, then all of the provisions in the u.s. code that say to states if you do something for no child left behind, we will >> but this is this is quite different. >> in south carolina v. dole where the matter of funding for the highway, suppose congress said, and if you don't build the highways, you have to go 35 miles an hour all over the state. we wouldn't allow that. >> no. well, there, of course, you would be interfering with a basic state prerogative as to establish their limit, and they are the condition is not related to that. here the condition is perfectly related to it. >> mr. carvin -- >> we want to create something new -- >> mr. carvin, here's a -- you refer to the medicaid example. that's a familiar -- a grant in aid says to the state, here's the federal money and here's the conditions, take it or leave it. that's one pattern. but this pattern that we have says flexible state. you can you can have your program if you want it, and if you don't, there's a fallback. there's the federal program. i mean, that's a typical pattern. it's the pattern of the clean air act. you can have a state implementation plan, but state if you don't get up your plan there's a federal implementation plan. i have never seen anything like this where it's if you take what the statute says you can have in 1321, then you get these disastrous consequences. >> that's why this is much less risky a deal for congress. and what distinguishes it from medicaid as the dissenting opinion in nfib pointed out. in medicaid, congress is playing all in, take it or leave it. if they turn down the deal, then medicaid is completely thwarted. here, if they turn down the subsidy deal, they still get the valuable benefits of an exchange and there's not a scintilla of -- >> what are those benefits? what are the customers that can buy on it? what are the insurers that will sell on it? >> well, three points. one is we know textually that they thought exchanges without subsidies work, because again, they have territorial exchanges, but the government concedes no subsidies. >> that's not -- >> we have legislative history which -- >> mr. carvin, that's not what you said previously when you were here last time in this never-ending saga. [laughter] you said without the subsidies driving demand within the exchanges, insurance companies would have absolutely no reason to offer their products through exchanges. and then you said the insurance exchanges cannot operate as intended by congress absent the subsidies. >> that is entirely true. they wouldn't have operated as intended because congress intended all 50 states to take this deal. so eliminating -- >> so why create 1326 at all? obviously, they thought that some states wouldn't. >> well, they thought it was possible and -- >> very possible. >> and then -- >> because they set up a mechanism for that to happen. >> and then what happens? you still get the exchange. it's not like medicaid where the entire federal program is thwarted. you get the benefits that were lauded. >> but nobody's going to visit the program if there are no subsidies because not enough people will buy the programs to stay in the exchanges. >> that is demonstrably untrue and not reflected anywhere in the legislative history. the legislative history quite clearly contradicts that. many senators got up and said there are very valuable benefits to the exchange, one-stop shopping, amazon, as president obama has said. the government came in the last case and told you these two things operate quite independently. we don't need exchange without subsidies. in contrast, there's not a scintilla of legislative history suggesting that without subsidies, there will be a death spiral. not a word. >> wait a minute. that was the whole purpose that drove this bill because states had experimented with this, and those that didn't have subsidies or other provisions of the act didn't survive. >> they didn't have -- >> you said it yourself in the prior case. >> no. the prior case was about the individual mandate. the government came in and said the individual mandate is necessary to affect death spirals. no one, in the findings in congress or anywhere else, suggested that subsidies were available. will subsidies reduce the number of people available on the individual -- >> my problem my problem is that the reverse. you're talking about congress, hiding, borrowing the phrase of one of my colleagues, a huge thing in a mousetrap. ok? because do you really believe that states fully understood that they were not going to get their citizens were not going to get subsidies if they let the federal government? what senator said that during the hearings? >> the same amount of senators who said that subsidies were available on hhs exchanges which is none. they didn't deal with it in the legislative history just as they didn't deal with medicaid because the statute was quite clear. let's talk about it in context again, justice sotomayor. the context is the only provisions in the act establishing any limit on the subsidies is found in 36b. so it's not a mouse hole. it's the place you'd expect to find it. it's the only place in the act that limits subsidies to purchases made on exchange. >> but it's a -- >> i don't know think that's quite right, mr. carvin. >> justice ginsburg. >> it's a tax code provision that's an implementation provision. it tells you how you compute the individual amount. >> it -- >> it it's not in the body of the legislation where you would expect to find this. >> no. your honor, if that's true -- >> and if it -- >> sorry. please. >> what justice kagan just read to you, you had the idea that the subsidies were essential -- >> no. >> to have the thing work. that's what you told us last time. >> what i told you was it wouldn't work as expected, and that's because they thought this deal would work just like the medicaid deal where all 50 states would say yes, so you would have both of congressional purposes. >> then why in the world would they set up this whole extra thing if they didn't think anybody was going to take it? >> well, that was my response to justice sotomayor. that is completely unsupported empirical observation made post hoc by amicus. there's no reflection of that in the legislative history. indeed, the legislative history refutes it. >> mr. carvin, we've heard talk about this other case. did you win that other case? [laughter] so maybe it makes sense that you have a different story today? >> i'm really glad your honor said that. >> and if i could return to context because i think -- >> i mean i'm sorry, mr. carvin. please. >> just very briefly, justice kagan. very much appreciate it. to respond, we've already talked about context. section 1311 is a key part of this context. it says in the strongest possible terms we want states to run these exchanges. if you give unconditional subsidies, then, of course there is absolutely no incentive for states to do it, and you have fundamentally undermined that distinct statutory purpose. whereas if you condition subsidies, congress accomplishes both of its goals. widespread subsidies, plus state-run exchanges. in terms of terms of art, again, there is language in the statute which says "exchanges," "exchanges under the act." those phrases naturally encompass both hhs exchanges and state-established exchanges. and, yet, the solicitor general is coming here to tell you that a rational, english-speaking person intending to convey subsidies available on hhs exchanges use the phrase "exchanges established by the state." he cannot provide to you any rational reason why somebody trying to convey the former would use the latter formulation. >> mr. carvin, why don't you take an extra ten minutes and maybe we'll give you a little bit more of a chance to talk. >> ok. fine. >> well, then, i'll ask a question. [laughter] >> well, if you're going to ruin my 10 minutes. >> no. i mean, let's go back to this question of where congress put this thing because putting aside constitutional issues, i mean, there's at least a presumption as we interpret statutes, that congress does not mean to impose heavy burdens and draconian choices on states unless it says so awfully clearly. and here and this goes back to what justice ginsburg was saying there's really nothing clear about this. i mean, this took a year and a half for anybody to even notice this language. and as justice ginsburg said it's put in not in the place that you would expect it to be put in, which is where it says to the states, here is the choice you have. it's not even put in where the statute defines who a qualified individual is or who is entitled to get the subsidies. rather, it comes in this technical formula that's directed to the department of the treasury saying how much the amount of the subsidy should be. and that seems to be it both makes no sense from congress's point of view, and in terms of our own point of view, in terms of interpreting statutes, that's not the clarity with which we require the government to speak when it's upsetting federal-state relations like this. >> i must respectfully disagree for three reasons, justice kagan. in the first place, of course, you where else would you expect a tax credit except in the tax code? that's where this was. you wouldn't put it in 42 u.s.c., which has nothing to do with taxes. it's the only place where exchange is limitations placed. you have three audiences here, not just states. you have to tell taxpayers what they're entitled to. you have to tell insurance companies when these subsidies are available. and you have states. so you have to put it in 36b. so the argument, i guess, the government is making is what you should have done is put half of it in 36b and half it in 1321 which, of course, would have confused everybody. 36b would say, exchanges period. then you'd go to 1321 and say when we said exchanges in 36b, we meant established by the state. >> mr. carvin, if i were a state official and i was trying to decide whether my state should establish an exchange, and i wanted to know whether individuals who enrolled in a plan on my possible state-established exchange would get a credit, where would i look? >> exactly. the basic thesis here is these exchanges don't work without subsidies. you've read 1311. you've read 1321. now you're going to go find out where the subsidies are. that's 36b. they're hypothesizing state -- >> i think not, mr. carvin. i mean, i think the place i would look to find out about my choices is in the provision of the statute that talks about my choices. i think the last place i would look is a provision of the statute that talks about what is it coverage months for purposes of this subsection, which, by the way, isn't even the right subsection, but whatever. [laughter] that's where i would look, is in where it talks about what a coverage month is? >> but, your honor, i've already described the difficulties of putting it part of it in 1321, right? because then you would create this bizarre tax credit provision which is only half true, and you wouldn't tell taxpayers and insurance companies. so i believe that's the complete answer. but the other practical point i'd like to make is they had three years to implement this. and no one thought the states were going to have to make a decision overnight. if the irs had done its job, every state would have been fully informed of the consequences because presumably they've read 36b, and then they would make an intelligent decision well in advance of the 2013 deadline. so there's a bizarre notion that states were somehow unable to read a statute or to or to read a regulation is simply -- >> i really want i really want to hear what you're going to say in your five to ten minutes. and if you want, only if you want, i would be interested in your responses to the government's brief, that if you read the words "established by the state" without reference to the technical definition as you wish, this isn't just about the taxes. it means employers in virginia don't have to make policy, don't have to don't have to give policies, but if they have one maryland worker they do. it means that they never can tighten up their medicaid regulations, never, in 34 states but, of course, in the others they can. it means that there's no qualified person ever to buy anything on an exchange established by the secretary for the state, and they have two or three other anomalies that have nothing to do with taxes, all of which supports their argument that you have to read this phrase technically according to the definition. now, that's their basic point. i've tried to summarize it. do it as you wish. i just want you to have 5 or 10 minutes to answer it. >> thank you. and the first point is there are no anomalies. >> i'm going to clock that, see if see if you get 5 minutes. [laughter] >> there are no the first point i'd like to make is there are no anomalies stemming from our interpretation of 36b. the government agrees with that. their biggest anomaly is this qualified individuals point about how there would be nobody on hhs exchanges. the solicitor general is not going to stand up here and tell you that if we prevail in our interpretation of 36b, they would be obliged by the logic of that opinion to empty out hhs exchanges. so we all agree that there's no connection between 36b and the qualified individual. that's point one. point two is, if you want anomalies, their interpretation of the statute requires 34 states today to lose all medicaid coverage. why is that? because of the provisions on 64a through 66a of the government's brief, there are various requirements that the state, on pain of losing all of its medicaid funds, must coordinate between the state-established exchange, the state agency for chip, and the state agency for medicaid in terms of secure interface and enrollment. now that makes perfect sense if "exchange established by the state" means what it says, but they think it encompasses hhs exchanges. well, the state cannot ensure coordination between hhs exchanges and the state agencies, and none of the 34 are doing it today. so under their atextual reading of the statute, 34 states will suffer the penalty that this court found in nfib as unconstitutionally coercive. as to this medicaid maintenance anomaly, the government agrees that the purpose of this provision was to freeze medicaid payments until you had an exchange with subsidies, which makes sense, right? you want to coordinate the two. and that's exactly what this provision means under our interpretation. until you have an exchange with subsidies, the states will be frozen. the government says, that thing ended on january 1, 2014. that's a figment of their imagination. it's nowhere in the statute. plus which it makes no sense. before 2014, the states were powerless to have an exchange with subsidies, right? they couldn't do it. so there was a 3-year freeze on medicaid that they were powerless to get out of. after 2014, if they don't want to have their medicaid frozen, all they have to do is establish an exchange. so it's a less harsh restriction on states, plus which it gives them another incentive in addition to the subsidies to create the state exchange, which is the purpose enunciated in 1311. i don't know oh, as to, yeah maybe somebody would from another if you had an employee that let lived in other state, maybe he would be subject to the employer mandate. why is that an anomaly? congress likes the employer mandate. of course they wanted to expand it. they also never thought it would really happen because, again what they thought was going to happen was there wouldn't be neighboring states without it because nobody was going to turn down this extraordinarily generous deal. i don't know if my 5 minutes are up, but that's my response to these anomalies. >> as i understand it -- >> i think if i could -- >> wow. you've been talking a long time. [laughter] >> yes. yes. sorry. >> you have two more sentences. >> even if there were anomalies in these other sections, you don't transport them to 36b which is concededly neither absurd and furthers the purposes of the act, just like in utility air, because the word pollutants didn't work with one section, you don't spread it like a virus throughout the rest of the act. you cure it in that provision -- >> those were two long sentences -- >> if and when there's any litigation. >> i think i think -- >> oh, it was a long sentence. >> yes. i think i'm right that justice breyer's question about anomalies, which are replete in the act, under your interpretation, did not talk about what i think is one of the most glaring ones, which is this qualified individualist thing, that you're essentially setting up a system in which these federal exchanges, that there will be no customers and, in fact, there will be no products, because section 1311 says that the exchange shall make health plans available to qualified individuals, and then the next section says that qualified individual means an individual who resides in the state that established the exchange. so under your theory, if federal exchanges don't qualify as exchanges established by the state, that means federal exchanges have no customers. >> which, of course, is not the reading that the government's giving to it because they're not going to tell you -- >> well, that's because they don't share your theory. >> no, no. >> under your theory -- >> no. >> that's the result. >> well, no. let me be as clear as i can. if we prevail in this case, they are not going to empty out the hhs exchanges because they understand that there are numerous defenses even if you interpret "established by the state" literally in the qualified individuals provision. number one defense that they will use is, it says you have to be a qualified individual with respect to an exchange. as justice breyer pointed out, the statutory definition of exchange is a 1311 exchange. so they're only talking about state exchanges, not these hhs exchanges, and it is in section 1312, which immediately follows 1311, before 1321. number two, "qualified individual" doesn't mean that means you're guaranteed access. it doesn't mean if you're not qualified, you're absolutely denied access. we know that from the illegal alien provision, which says illegal aliens are neither qualified individuals nor eligible for subsidies. >> ah, but look at the look at the prisoner provision, which says prisoners shouldn't be treated as qualified individuals. so under your theory, this statute effectively said that prisoners should be able to enroll on federal exchanges? that makes no sense. >> it makes perfect sense to say the states get a choice. think about somebody who's in prison in february, they're getting out in april, they've got to buy insurance under the individual mandate. so if you said nobody who's incarcerated can buy insurance that means they wouldn't be able to buy insurance during the relevant enrollment period. it makes perfect sense to give states the flexibility to say, as to those incarcerated principles, you can make them available for exchanges, but under illegal aliens we don't want to, which is why we are saying they are neither qualified nor eligible. even if justice even if you don't find that the most pristine logic to be applied to a statute, remember, we are interpreting these statutes to avoid an absurd result. and it's a basic principle of statutory construction that you will give a plausible, if not the most persuasive, reading to a statute to avoid the result. >> but we are interpreting a statute generally to make it make sense as a whole, right? we look at the whole text. we don't look at four words. we look at the whole text, the particular context, the more general context, try to make everything harmonious with everything else. i think you said, even at the very beginning of this argument as we were going back and forth about my hypothetical, that, of course, context matters and context might make all the difference with respect to what those five words mean. and i think what we're suggesting is that, if you look at the entire text, it's pretty clear that you oughtn't to treat those five words in the way you are. >> i've given you the contextual points before. i think the key one that i'd like to convey to you, justice kagan, is section 1311. you say the statute must work harmoniously. if you provide subsidies to hhs exchanges, you have essentially gutted section 1311's strong preference for state exchanges. what will happen is precisely what did happen under the irs rule, 2/3 of the states are saying no, we're not going to undertake this thankless task of running these exchanges with no incentives to do so. so yes, it what i have here in terms of what the statute means is 36b quite clearly saying exchanges are available only on states. i have 1311 explaining why they limited subsidies to that. and there is no contrary legislative history at all. what do they have, an atextual reading of 36b, which they can't explain why anybody would have used those words if they wanted to convey exchanges, a rule that completely undermines the purposes of 1311 and no supporting legislative history. so under all the legal materials that this court normally used to discern what statute means, we clearly prevail. >> thank you, counsel. general verrilli, you'll have an extra 10 minutes as well. >> thank you, mr. chief justice, and may it please the court, standing has been raised, so let me start by telling you where we stand on standing and then i'd appreciate the opportunity after that to summarize what i think are the two key points in this case. now, with respect to standing, the question the case or controversy question turns on whether any of the four petitioners is liable for the tax penalty for 2014. now, this case was litigated in the district court in 2013 based on projections on the part of each of the four petitioners that they would earn a certain income in 2014. they filed declarations saying that. with respect to 2 of the 4, the projections were of their income were such that they would qualify for the unaffordability exception and they wouldn't have standing. with respect to the other two, their projections were such that they wouldn't qualify for the unaffordability exception and they would have standing. but those were projections in 2013 about their income in 2014. 2014 has now come and gone, and we don't know, but petitioners know whether any of the 4 have in fact are, in fact, liable for the tax penalty and that will depend on whether their actual income in 2014 matched their projections. now, mr. carvin said there was fact-finding about this. i'm afraid that's not correct. the petitioners did file a motion for summary judgment, but the case was decided on the basis of the government's motion to dismiss before discovery and without any fact-finding. i'm assuming because mr. carvin has not said anything about the absence of a tax penalty, that at least, 1 of the 4 has and is, in fact, liable for a tax penalty, but that's the key standing question. now, with respect to the veterans point, your honor, if it is the case, as mr. carvin tells us, that mr. hurst was a veteran for only 10 months, then i think he's correct, he would not qualify for va health care because you generally have to serve two years. so that's where we are on standing. now, if i could turn to the merits. >> so are you saying one person does have standing? >> no, no. it will depend on whether as a factual matter 1 of the 4 has and is, in fact, liable for the tax penalty for 2014. and that's information that is not in the government's possession. it is in the possession of petitioners' counsel. and i should make one more point, with respect to 2015, there were no projections, there's nothing in the record about the possible income of any of the petitioners for 2015, so there's really nothing that would establish a case of controversy for 2014. >> well, you're surely not raising a standing question with us here for the first time at oral argument, are you? >> well, mr. chief justice, as i said, that based on the projections, it was our understanding that at least 1 of the 4 would be liable for a tax penalty. the question of standing has been raised and i've tried to identify for the court what i think is the relevant question which is whether any one of the 4 has, in fact is, in fact liable for a tax penalty because -- >> this is this is on a motion to dismiss, right? >> well, that's correct, your honor, but it does also go to this court's jurisdiction. because if none of the four is liable for a tax penalty for 2014, there just isn't the case or controversy. none of them is liable, there's no there's no injury. and so i do think that's ultimately the relevant question here and with respect to liable for a tax penalty for standing. i don't think there's a question about veteran status, but i do think that's the relevant question. >> isn't the question before us as to standing whether the district court correctly held in the motion to dismiss context that there was standing? that may not be the end of the matter, but don't we have to isn't that what's before us? >> well, that may be yes. but then you and you might alternatively think about this as a question of mootness, i guess, in that, you know, based on the projection, there was a case or controversy, but if the projection didn't come to pass and none of the plaintiffs is liable for a tax penalty, then the case or controversy no longer exists. >> well, what are you suggesting? should we have a should we have a trial here? >> no, i'm not suggesting anything of the kind. >> on this issue and find -- what the facts are? >> justice alito, i did not raise standing affirmatively the court raised it. and i'm just doing my best to let the court know what our position is on standing. >> well, you would you send it back then to the district court? >> well, i guess no. i guess what i've said is that mr. carvin hasn't suggested that there's no plaintiff liable for a tax penalty. based on that, i'm inferring that at least one of the petitioners -- >> representation by him? >> and i'm not -- >> would you -- has standing. why wouldn't we accept a there's no reason not to if he if he makes a representation that at least one of the four is has was liable in 2014 and is liable in 2000 or will be liable in 2015 -- >> so i guess what i'm saying -- >> i mean, we know at least one of them won't because that's -- >> what i'm saying about that is i'm actually going to step further than that, justice sotomayor, given that there hasn't been i'm willing to accept the absence of a representation as an indication that there is a case or controversy here, and so that's why, mr. chief justice, we haven't raised standing and that's what it but i do think that the key question is whether one of the four is liable for a tax penalty. you have to have that to have a case or controversy in the case. if i could now, let me please turn to the merits that summarize what i think are the two key points. first, our reading follows directly from the text of the act's applicable provisions and it's really the only way to make sense of section 36b and the rest of the act. textually, their reading produces an incoherent statute that doesn't work. and second, our reading is compelled by the act's structure and design. their reading forces hhs to establish rump exchanges that are doomed to fail. it makes a mockery of the statute's express status express textual promise of state flexibility. it precipitates the insurance market death spirals that the statutory findings specifically say the statute was designed to avoid, and of course it revokes the promise of affordable care for millions of americans. that cannot be the statute that congress intended. >> of course it could be. i mean it may not be the statute they intended. the question is whether it's the statute that they wrote. i mean, you know, there are no provisions in the statute that turn out to be ill considered and ill conceived. >> so it's not the statute that they wrote, and the reason it's not the statute that they wrote, i think i want to actually start, if i could, picking up i think on a variation of the hypothetical that justice kagan asked. in petitioners' brief they throw down the gauntlet with respect to a hypothetical about airports, and that a statute requires a state to construct an airport, it says the federal government shall construct such airport if the state doesn't, and no one would think that the federal government's airport was an airport constructed by the state. well, what i would say to that is that if those statutory provisions were conjoined with a provision that said airplanes may only land at airports constructed by the state, then you would conclude immediately that what that federally constructed airport qualifies as an airport constructed by the state, and the because otherwise the statute would make no sense. and the same exact thing is true here. >> there are no statutes that make no sense. >> this one makes sense. >> if that is the case, every statute must make sense and we will we will twist the words as necessary to make it make that can't be the rule. >> that isn't the rule. but the rule -- >> of course not. >> is that you read -- that you don't read statutory provisions in isolation. you read them in context. the rule is that you read them in order to ensure that the statute operates as a harmonious whole. you read them so that you don't render the statutory provisions ineffective. you read them to promote -- >> where is that possible. >> you read -- >> i mean, you acknowledge that all of what you're saying only applies where there are alternative readings that are reasonable. you pick the one that will do all the things that you say. >> and there is there is -- >> but, but if it can only reasonably mean one thing, it will continue to mean that one thing even if it has untoward consequences for the rest of the statute. no? >> with respect to this statute, first, let me i want to make two points. first -- >> answer me in principle. i mean, is it not the case that if the only reasonable interpretation of a particular provision produces disastrous consequences in the rest of the statute, it nonetheless means what it says. is that true or not? >> i think there are a couple of limitations on that principle. the first is if what you have is a situation in which the that creates conflict within a statutory scheme, then the court's got to do its best to try to harmonize and reconcile the provisions. and, secondly -- >> well, i disagree with that. you have a single case in which we have said the provision is not ambiguous, it means this thing, but, lord, that would make a terrible statute, so we will interpret it to mean something else. do you have one case where we've ever said that? >> i think i think brown & williamson is a good example of that. in brown & williamson, the court said, look, the definition of drug and drug delivery device would actually seem unambiguously to cover tobacco but when you read that provision in context, and considering the full scope of the regulatory regime, it can't possibly mean that. but let me let me actually work through the text here, because i do think i can show you that there's a quite reasonable reading of this statutory text that allows you to affirm and requires you to affirm the government's position. >> but, general verrilli, before we get too immersed in a number of provisions of this, could you respond to a question that was asked during mr. carvin's argument. if we adopt petitioners' interpretation of this act, is it unconstitutionally coercive? >> so the here's what i would say about that, justice alito. i think that it would be certainly be a novel constitutional question, and i think that i'm not prepared to say to the court today that it is unconstitutional. it would be my duty to defend the statute and on the authority of new york v. united states, i think we would do so. but i don't think there's any doubt that it's a novel question, and if the court believes it's a serious question -- >> is it a i was going to say does novel mean difficult? [laughter] because it does seem to me that if petitioners' argument is correct, this is just not a rational choice for the states to make and that they're being coerced. >> so what i -- >> and that you then have to invoke the standard of constitutional avoidance. >> well, what i was going to say, justice kennedy, is to the extent the court believes that this is a serious constitutional question and this does rise to the level of something approaching coercion, then i do think the doctrine of constitutional avoidance becomes another very powerful reason to read the statutory text our way. because i do think and i do think with respect to the point that your honor's making remember, it's not just it's not just a situation in which there is onerous conditions, onerous consequences for state residents. it's also a profound problem of notice here, that, you know, if you read petitioners' if you take petitioners' reading of the statute, then the idea that states were given added -- you can't possibly justify this as adequate notice to the states. >> well, mr. general verrilli, let me ask you this about notice. we get lots and lots of amicus briefs from states. and we got two amicus briefs from states here. 34 states, i think, is -- that's the number of states that declined to or failed to establish a state exchange? >> correct. >> now, if they were all caught off guard and they were upset about this, you would expect them to file an amicus brief telling us that. but actually, of the 34, only 6 of them signed the brief that was submitted by a number of states making that argument. 23 states, 23 jurisdictions submitted that brief. 17 of them are states that established state exchanges. only 6 of the states that didn't establish state exchanges signed that brief, how do you account for that? >> so, i guess i'd make two points about that, justice alito. first, you've got states there, states in both camps, all of whom told you that they didn't understand the statute that way. now, with respect to the other 8 states that filed the amicus brief on the other side, i actually think there's quite an important point that goes to their understanding of what this act did. remember, this is an irs rule that we're talking about here, and the irs put out a notice of proposed rulemaking saying this is what we intend to do, and several of these states oklahoma, indiana, nebraska they filed rulemaking comments in that in that proceeding. and if you look at those rulemaking comments you will see that they address a number of issues, and they say nothing nothing about the issue that's before the court now. so if they really understood the statute as denying subsidies in states that did not set up their own exchanges, that would have front and center in their rulemaking comments, but they said nothing about it and i think that tells you a good deal about where -- what everybody understood that this statute was -- >> well, there's another point on notice on this pennhurst argument that seems curious to me. usually when this argument comes up, a state has signed up for a federal program and then they say, oh, my gosh, we didn't realize what we had gotten ourselves into. but here, it's not too late for a state to establish an exchange if we were to adopt petitioners' interpretation of the statute. so going forward, there would be no harm. >> well, let me address that directly, and then i'd like to make a broader point about statutory context in response. now directly, of course, i don't i don't think it's possible to say there would be no harm. the tax credits will be cut off immediately and you will have very significant, very adverse effects immediately for millions of people in many states in their insurance markets -- >> well, i said i've said going forward. >> and then -- >> after the current tax year. >> and then going -- >> would it not be possible if we were to adopt petitioners' interpretation of the statute to stay the mandate until the end of this tax year as we have done in other cases where we have adopted an interpretation of the constitutional or a statute that would have very disruptive consequences such as the northern pipeline case. >> sure. northern pipeline is an example of doing that, and it will be up to the court to decide whether it has the authority to do that. i will say, this does seem different than northern pipeline to me, because this is about money going out of the federal treasury, which is a different scenario. but if the court obviously, if that's where the court is going and that's what the court thinks the proper disposition is, that would reduce the disruption. but what i think is another important point to make here just as a practical matter, the idea that a number of states all of these states or a significant number are going to be able to in the 6 months between when a decision in the this case would come out and when the new the new year for insurance purposes will begin we'll be able to set up exchanges, get them up, up and running and get all the approvals done i think is completely unrealistic. >> how long has it taken -- >> well, for just to give you an example of the current time line, justice ginsburg, the in order to be in order to have an exchange approved and insurance policies on the exchange ready for the 2016 year, those approvals have to occur by may of 2015. ok. so that gives you a sense of the of the time line that hhs is operating under. >> what about what about congress? you really think congress is just going to sit there while all of these disastrous consequences ensue. i mean, how often have we come out with a decision such as the you know, the bankruptcy court decision? congress adjusts, enacts a statute that 16 that takes care of the problem. it happens all the time. why is that not going to happen here? >> well, this congress, your honor, i -- [laughter] you know, i mean, of course, theoretically of course, theoretically they could. >> i don't care what congress you're talking about. if the consequences are as disastrous as you say, so many million people without insurance and whatnot, yes, i think this congress would act. >> and but the relevant question and then i'm going to try to get back to the point i was trying to make in response to justice alito's question. the relevant question here is, what did the congress that enacted this statute in 2010 do? did they really set up a system in which the states are subject to the kind of onerous situation that the petitioner claims? and i think there are three textual indications objective, textual indications that cannot possibly have been the statutory scheme that congress tried to set up. first is the existence of the federal exchanges. it would make no sense, no sense for congress to have provided for federal exchanges if, as mr. carvin suggests, the statutory design was supposed to result in every state establishing its exchange. second -- >> well, wouldn't it have been again, talking about federalism a mechanism for states to show that they had concerns about the wisdom and the workability of the act in the form that it was passed? >> so, justice kennedy, i think the federalism values are promoted by our interpretation because if that is, indeed, what a state thought, if a state really would have preferred that not to have the state government participate in the implementation of this act, for reasons that your honor identified, the structure of the act that congress put in place and that we're advocating for today fully vindicates that concern. they can decide not to participate without having any adverse consequences visited upon the citizens of the state. and that's why our reading is the pro-federalism reading. it's their reading that seems to me that is the anti-federalism reading, and that's a powerful reason to reject it. and if i could go to the second statutory point, which is related to what we're talking about, justice kennedy, which is section 1321, says that this statute is designed to afford state flexibility. state flexibility. it would be an orwellian sense of the word "flexibility" to use it in the manner that petitioners say the statute uses it, because it's the polar opposite of flexibility. and the third point, seems to me, is the notice point, that if, indeed, the plan was, as mr. carvin said, that every state was going to establish an exchange for itself and that would cure all of the massive statutory anomalies and textual anomalies and absurdities and impossibilities that his reading provides for, if that was really the plan, then the consequence for the states would be in neon lights in this statute. you would want to make absolutely sure that every state got the message. but instead what you have is a subclause in section 36b, which is a provision that addresses the eligibility of individual taxpayers for taxing purposes. >> this is not the most elegant thing drafted. it was pushed through on expedited procedures. it didn't have the kind of consideration by a conference committee, for example. that statute usually do. what would be so surprising if among its other imperfections there is the imperfection of what the state have to do is not obvious? that doesn't strike me as inconceivable. >> just as scalia -- justice scalia, i will talk about the legislative process. i think will be quite relevant, even to you in the question that you asked. the language here in 36b was not the product of some last-minute deal, or scrambling at the end the language -- the statutory structure about tax credits the language that isn't 1321, the product of the senate finance committee markup, which went on for weeks and weeks, it was a public hearing, and frankly it was covered by c-span, you can go watch it on the archives. you will see coming out of that at the understanding was that this statutory set up with result substance -- subsidies available in every state. >> were senators opposed to having the federal government on the whole thing because that will lead to a single-payer system. which some people wanted. the explanation for this division is it -- for this provision is it about -- it prevents the federalization of the entire thing. >> certainly a possible exclusion. >> mr. cardin has floated that is a possible vaccination. there is absolutely no contemporaneous evidence, none whatsoever that anybody that way, but the solution to the problem you what and if i is what congress did my having to set up their own exchanges by state-by-state federal fallbacks, rather than in national system. he has stated yet know intention -- that he had no intention. what mr. carter has suggested that this is -- mr. cardin suggested that this is a deal to get pvotes so that the act passed. there is objective proof that is not true any provisions in the act that were negotiated at the end are entitled 10 of the act. if you look in the act pages 833-924, that his title 10, you can see all of the amendments not a single one had anything to do with the statutory language before the court -- >> some was created by your interpretation. if congress did not want the phrase "established by the state" to mean what it would normally taken to me, why did they use that language? why didn't they just other formulations that appear elsewhere in the act? why didn't they say "established under the act?" why did they say established within the state"/" why didn't they say it is a state exchange when i have a provision that does exactly that the district of columbia and for the territories. it says that they are deemed to be states for purposes of the act. why would they do that? >> the provision>> says "est that most by the state under -- established by the city under section 11." we think this is a better reading of the text, that by cross referencing section 1311, effectively what congress is saying that exchanges established through whatever mechanism, exchanges set up by states themselves -- >> you are saying cross-referencing 13,1111. >> let me walk that through. >> that seems to be going in the wrong direction rather than the right direction. >> i think it goes in the right direction if you stay with me. >> before you get onto that, your answer doesn't ask why the state is in their. why wouldn't they say "established under 1311?" >> the second point is that any provision this appears in the act it is doing work. the work is doing is talking about the specific exchange established in the specific state as opposed to general rules for exchanges. if you look at the medicaid means of effort provision, it works the same way -- >> why didn't you use the phrase "in the state/" >> i suppose they could have but it worked perfectly well this way. is clearly how they are using it with respect to individual provisions. with respect to that provision, it's as a qualified individual is a person who was -- a person who reside in the state of the exchange. clearly what they are talking about is a geographical reference to the state. it goes on every time the statute uses that phrase. it is doing that works, and that is why it is in their. i can go back to your point, justice kennedy. established under section 1311 b-1 says "each state shall establish an american health benefits exchange for the state." it is not urging that the states do it, it says "each state shall establish." it means it must have meant something more inclusive than "each state government shall its own set of the exchange." we know that because carter's is legislating against the backdrop of the 10th amendment. we know that of section 1321. because that section provides the means by which the 1311 b-1 requirement is satisfied. it is satisfied by a state electing to meet the federal requirements for exchanges, or it can be satisfied in the event that a state doesn't work tries because of -- or comes up short. >> when the statute says "each state stealth established" it means the federal government shall establish if it doesn't. >> know i think the right way to think about this justice alito is that what is going on here is that -- the right place to focus, let me put it that way -- the right place to focus is not on the who, but on the what. on the thing that gets set up and whether it qualifies as an exchange established by the state. and these exchanges do qualify. the reason that they qualify is because they fulfill the requirements in section 1311 b-1 that each state shall astonish an exchange. 1311 tells you that. because when a state has elected to meet the federal requirements hhs sets up and required exchange. such exchange referring to the prior exchanges. the only exchange required under the act is required under section 1311 b-2. -- b-1. is the filling the requirement over 1311 b-1 that each state establish an exchange. it says that an exchange established under section 1311 which says that he state -- each state shall establish exchange. it has to be that way. it is an page 22 of the petitioner's brief that an exchange that hhs setup is supposed to be the same exchange and functions like an exchange at the state sets up -- >> you're putting a lot of weight on the word "such e xchange." it seems the most unrealistic interpretation of "such" that the federal government shall the stuff was a state exchange. rather it seems to be an exchange for the state rather than an exchange of the state. how can the federal government established a state exchange? that is gobbledygook. >> this is gobbledygook, justice scalia. will go back to some think justice alito asked earlier. the link which of 36-b were the same it was now. in the statute set in 1321 that an exchange set up by hhs cell qualify as an exchange -- shall qualify as an exchange under section 1311, you wouldn't change the length which of 36 b one iota and there would be any doubt in anyone's mind that the subsidies were on federal changes. we are saying that reading these together is what the statute does. certainly that is a reasonable reading of the statute. is the only reading of the statute allows you to be faithful to the text of 1311 b-1, the word "shall" and the 10th of -- >> the word "such" means not just. the exchange that the state was supposed to set up, in the state exchange. >> it means an exchange that qualifies as a state -- ethnic change stuff for this state because it qu >> your case hinges on the fact that a federal exchange is a state exchange. >> it hinges on it qualifying as the state exchange or being equivalent to the state exchange for the purpose of the operation of the statute. that is a reasonable meaning of the textual provisions. once you concluded that is a reasonable meaning you have to read it the way that we say it is to be read. the only way to make sense of the statute is the only way to bring it into harmony with the act qualified individual, the qualified health print provisions, which delete what they admit in conservative under the reading of the law -- in their absurdity of the reading of the law. >> to admit there are provisions in the act where the exact same phrase "establish by the state" has to me be renting estoppels by the state and not hhs? >> i think they are wrong about each one. >> i would be interested in your answer to it. >> they say if that is ready to an exchange established by the state there is read to me and hhs, it means that the state in which that exchange is established is responsible for making sure has an electronic interface. >> the statute says -- first of all, the statute -- what it says they shall establish procedures to ensure the coronation. hhs has issued regulations setting forth what that statutory vision requires in the circumstances. every state was a federally facilitated strange that met the permit and works properly fine. there is no anomaly there at all. >> to the regulations attract the statutes? >> yes they do. >> do they get state authority to say whether or not these conditions have been met? >> the requirements are imposed on the state medicaid and the relationship. that is with the statute does. it doesn't say and i think it proves our point -- it says each state shall stop it doesn't -- it doesn't say each state shall. it presupposes that there is going to be something that qualifies as an exchange in every state. there is no anomaly there. if you want to ask me about any of the older ones, you can. there are no anomalies frankly. >> i understand or stand your answer that there are no federal relations and they have all done it. the state has some obligation under the regulations to make sure there is a proper interface with the federal exchange. >> those are state government agencies. that is their side of the interface that the statute governs. i want to focus on this point about the qualified individual. it is quite fair in section 1311 that an exchange, not exceed established by the state, but in exchange can only sell a qualified health plan will stop it is for been in from selling a helpline qualified health plan. it is an exchange. it says the certify health plan the exchange has to decide that it is in the interest of qualified individuals. qualified individuals are those who reside in the state that establish the exchange stop you read the statute the way mr. cardin region instead of the weight we read it, if you come to the conclusion -- there are no qualified individuals therefore certified. there aren't any. there aren't any qualified health plans that can lawfully be sold on the exchange. >> what is the provision is only a qualified individual can be in on the plan under an exchange? >> i will address that, but it want to make clear on the provision i'm talking about with respect to the prohibition on selling a qualified health plan. is 1311(d)(2)(b), which is at page 8a of the appendix to our brief. it's absolutely unambiguous. an exchange, not an exchange established by the state, an exchange may not make available any health plan that is not a qualified health plan. so -- >> qualified health plan. but what's the provision you were referring to when you said that an exchange may enroll only a qualified individual? >> well, i what they 20 what the statute says throughout is that qualified individuals are eligible to purchase on exchanges, and it's the necessary meaning of that phrase that if you are not a qualified individual, then you are not eligible to purchase health care on an exchange because otherwise, the word qualified would not have any meaning. the whole the meaning of the word qualified is to distinguish between people who are eligible and people who are ineligible. and as a policy matter, it wouldn't make any sense because think of the people who are not qualified individuals. the people who don't live in the state, the people in prison, and they're unlawfully documented. >> this is part of section 1312. a person qualified to purchase on an exchange must, quote reside in the state that established the exchange. >> right. and there are no such people in 34 states under mr. carvin's theory of the statute. so it just doesn't it just you just run into a textual brick wall. >> i understand your argument is that it's a it's a logical inference from a number of provisions that only a qualified individual may purchase the policy, but i gather there is no provision that you can point to that says that directly. >> it's well, that's what qualified means, justice alito. it means that, you know, if you're not qualified, you're unqualified. and so, i mean, that's what it means. and so you're just reading the word "qualified" out of the statute if you read it that way. >> "qualified" is used in the in the lay sense of the term, it's not a technical term here. >> well, i think -- well, given the way it's defined, it's defined as a person who resides in the state. it excludes people out of state. it does that because the statute was quite clear that you weren't going to be allowed to shop for insurance policies across state lines because that would infringe on traditional state prerogatives regulating insurance. and it and with respect to prisoners, it doesn't make any sense to say that prisoners should be able to get insurance. mr. carvin says, yes, it does because they get out of prison. well, there's a specific statutory provision that says when you face a changed-life circumstance, such as getting out of prison, you can sign up for insurance at that point. he makes the point about unlawfully present persons being both unqualified and not being able to be covered, but that's not that's not surplus, that's there for a very important reason, which is that someone can be in lawful status and, therefore, be eligible for health care, but then lose lawful status and at that point, they can no longer be covered. so, just none of that works for them. none of that works for them. and but to really, to get to the fundamental point here that both at the level of text, you have clear irresolvable conflicts so that the statute can't work if you read it mr. carvin's way. >> is that a synonym for ambiguity? >> i think so, exactly right justice scalia i mean, excuse me, justice kennedy that you have ambiguity there precisely because you have to you know this is a statute that's going to operate one way or the other. and the question is how it's going to operate. and when you read it their way >> well, if it's if it's ambiguous, then we think about chevron. but it seems to me a drastic step for us to say that the department of internal revenue and its director can make this call one way or the other when there are, what, billions of dollars of subsidies involved here? hundreds of millions? >> yes, there are billions of dollars of subsidies involved here. but two points about that -- >> and it seems to me our cases say that if the internal revenue service is going to allow deductions using these, that it has to be very, very clear. >> so -- >> and it seems to me a little odd that the director of internal revenue didn't identify this problem if it's ambiguous and advise congress it was. >> so a few points about that with respect to chevron deference. first, we do think chevron deference clearly supports the government here and i'll explain why. but before you get to that, you can resolve and should resolve this statute and the statute's meaning in our favor even without resort to chevron deference. that's what the canon of reading a statute as a whole to make it work harmoniously directs you to do. it's what the very important principles of federalism that we've been describing here direct you to do. if you think there's a constitutional problem with the statute, it's what the doctrine of constitutional avoidance directs you to do. now, with respect to chevron section 36b(g) of the statute expressly delegates to the irs the specific authority to make any decisions necessary to implement section 36b. so you don't have any ambiguity. congress said the irs should do this. it is a big question, but as the court said in city of arlington two terms ago, chevron applies to big questions as well as small. your honor raised this point about the need for clarity in a tax deduction and irs in the statutory reading of tax deductions, there is a learned treatise that describes that as a false notion. and it is certainly not consistent with this court's unanimous decision in mayo two terms ago that chevron applies to the tax code like anything else. and so -- >> if you're right about chevron, that would indicate that a subsequent administration could change that interpretation? >> i think a subsequent administration would need a very strong case under step two of the chevron analysis that was a reasonable judgment in view of the disruptive consequences. so as i said, i think you can resolve and should resolve this case because the statute really has to be read when taken as a whole to adopt the government's position. but i do take -- >> general -- >> if there are any if there are any tax attorneys in the in the courtroom today, i think probably they wrote down what you just said. when we get future tax cases the united states is going to argue that we should not read them to you know, there should be no presumption that a tax credit is provided by that statute. >> you should you should read it according to its terms. and when you read this provision according to its terms and you read it in context and you read it against the background principles of federalism, you have to affirm the government's interpretation. thank you. >> thank you, general. four minutes, mr. carvin. >> thank you, mr. chief justice. very quickly on standing. mr. hurst would be subject to a penalty absent relief by this court for 2014. as i've discussed, both he and mrs. leevy, of course, would face the same principle for 2015. if the government is suggesting that their case has become moot because of changed circumstances, under cardinal chemical 508 u.s. 83, it's their burden to raise it, not ours to supplement the record. in terms of the anomaly, in terms of all the states losing 34 states losing their medicaid funds, the solicitor general greatly distorted the statute. it's printed at 64a of their exhibit. it says, "a state shall establish procedures," so the notion that hhs established them is obviously contrary to that. it says, "the state will identify people to enroll on their exchanges." well, they can't enroll anybody on their exchanges if there are no such exchanges in the state. therefore, by the plain language, if you adopt the notion that "exchange established by the state" means established by hhs, all of them need to lose their medicaid funding. >> could i follow up on something the general ended with, which and justice kennedy referred to, which is the need to read subsidies limited. but so is in a limited way. but so is the need to ensure that exemptions from tax liability are read in a limited way. and under your reading, we're giving more exemptions to employers not to provide insurance, more exemptions to states and others or to individuals, how does that work? i mean, you've got two competing -- >> no, no. you do get more exemptions for employers under our reading, but and the same principle applies. is it unambiguous? it's undisputed that one is unambiguous. >> well -- >> the dispute here is whether or not if they win under ambiguity, and they don't because the canon requires unambiguous statutes not to afford the tax credit. in terms of the employer mandate, i think that's very helpful in terms of justice kennedy's concern about federalism. under their view of the statute, the federal government gets to unilaterally impose on states -- there's an amicus from indiana describing this a requirement that states insure their own individuals. it implies the employer mandate to states. under their theory, the states are absolutely helpless to stop this federal intervention into their most basic personnel practices. whereas under our theory, they are able to say, no. so actually, the more intrusive view of the statute is theirs. in terms of the funding condition, head on, your honor i think my short answer is as follows -- there's no way to view this statute as more coercive or harmful than the medicaid version of medicaid that was approved by this court in nfib and, indeed, the nfib dissenting opinion pointed to this provision as something that was an acceptable noncoercive alternative. but in all events, even if there's a constitutional doubt under a novel constitutional question, as justice scalia pointed out, there's no alternative reading of the statute that avoids that because either way, you're intruding on state sovereignty. in terms of the anomaly, in terms of qualified individuals as predicted, solicitor general did not come up here and tell you, yes, if we prevail here under this theory, they're going to have to empty out the hhs exchanges. nor did he even respond to my argument that with respect to an exchange under the definitional section only applies to state exchanges. so i think we can view this as a complete tendentious litigation position and not a serious statutory interpretation. in terms of the qualified health plan that he discussed with you, justice alito, the complete answer to that is that is in 1311. 1311 only is talking about state established exchanges. it has no application to hhs exchanges, therefore, it can't possibly create an anomaly with respect to those hhs exchanges. >> thank you, counsel. the case is submitted. >> after the oral argument, the white of the plaintiff and the defendant of the king v. burwell lawsuit spoke to reporters. also the attorney represent lawmakers who authored the health care law. health and human services secretary sylvia burwell. this is about 25 minutes. >> hi, my name is pam hurst. i am here with my husband doug. >> we a your behalf on -- we are here on behalf of all the plaintiffs in king v. burwell. decisions made here in washington directly affect middle-class families like ours. we believe it is time that those weapons hurt by washington take a stand. that is my dog joined the case -- why doug joined the case. we never imagined we would show up at the supreme court, but that shows you how important this case is. not only for us, but those around the country who are affected by obamacare. there are millions of americans who have lost their plans or their doctors or, like doc and i -- like doug and i, were forced by the irs to either buy insurance we don't want or face a tax penalty. we want americans to have options. we believe there is a better way to take care of people who need help. but there is no reason to force millions of us to pay tax penalties if we don't join a government program. we left our estate and national -- our state and national leaders to write laws. we do not let the irs. we believe in preventing the irs from rewriting our health care laws is the right thing to do for our family and our country and our country. what the internal revenue service has done isn't fair, it isn't right, and it is legal. we look forward to the supreme court's decision and hope that the court rules to protect our choice and the laws that govern our nation. thank you. >> is there a better way to cover the insured with some kind of subsidy? >> i am mike carbon, i argued on behalf of -- mike carvin. we had a candid exchange of points -- viewpoints. we believe our case is compelling. to believe the court will regulate the merits of our statutory reputation -- statutory interpretation and drs will not rewrite the plain language. >> justice kagan and i had a candid exchange of viewpoints. i persuaded her at the end of it. i urge you there are nine justices. >> reading the statute as i call automatically reinforces our point, principally the point that a clear this up the statute was to encourage states to establish at their own instinct is, which was to medically undermined and frustrated by the irs rule which divides the beauties regardless of whether the state do that required task. -- which divides subsidies regardless of whether the states do that retardrequired task. after the conversation, i think it became clear what this reading -- indeed, it would be a greater intrusion on state sovereignty to accept the government's position because this would allow the government to unilaterally impose the employer mandate on state and local employers, as well as other employers in the state. >> vacarvin www.c-span.org [indiscernible] >> last time we were arguing that the affordable care act should not be the law of the land. now we are arguing that it should be the law of the land and it shouldn't be dramatically altered by an unelected bureaucracy. >> do you see any hundred internet? -- do you see any contradiction in that? >> i think it is perfectly acceptable. now that it is the law of the land, we needed to be neutrally and fairly interpreted. that is exactly why we are here to vindicate the rule of law. >> you say is the law of the land. >> as was pointed out, he seen the leaders in congress are well prepared to do with any transition issues. i assume the states, if they don't, won't be able to go ahead and create these dangers they would have created without the irs's intervention for. >> how do you explain the americans will lose insurance without a subsidy? >> if you're like me that there is a compelling policy reason to come -- to help these people, i'm sure elected officials at the state or federal levels into that. the court is not prepared to say that they make policy rather than delightedly to branch. >> what about the issue that states --literally bizarre >>. the only reason they were confused about it was because the irs pulled a bait and switch on them. it meant that statement federal. all the states would have known what the deal was in the statute. it takes a lot of hus-- since we caused two thirds of the state not to have any stages, that is an ardent in favor of regulation, which is essentially what the government is saying to that. never surprised by diggers questioning by vigorous justices, because that is certainly the norm. >> are you at all concerned about this cause -- causing a collapse in the insurance system? >> insurance premiums will skyrocket for everybody, that certainly confirms my poker point. not only people receiving the subsidies, but people of all income strata would demand that congress or the state do this. the difference is would be done through the legislative process rather than the irs hijacking the legislative process. thank you very much, appreciate it. >> on the attorney general from oklahoma. i was a part of leading the first case on this -- has been a great partner to this process. the state of oklahoma, like 36 other states had a very clear choice to make. the needed decision not to set up a state health care exchange. this issue is not just about subsidies. when you invite the subsidies in your state, you're also inviting >> the law says the word establish by the state. shouldn't that mean that only state run exchange is have subsidies? within five minutes, justice said it will operate in the constitution, we are reading a tax code, it has defined terms and those defined terms clearly say that when the federal government wants an exchange, it is such an exchange, just like a state one, and it should be eligible for subsidies. i think you saw that heavily hammered. the idea that this isn't an end big was provision. this is a provision that everyone understood at the time to provide subsidies to the federal and state exchanges. >> thank you. i just want to emphasize one of the points that justice kennedy made today. which is that the law was written by congress to provide affordable health care to all americans and to provide for state flexibility. but ironically, nm the petitioners are committed that would be course of to the state that were not respect the state choice, congress specifically allowed for flexibility or states to set up their own exchanges or as the lost visibly provides, to allow the federal government to run the six changes in their stead. we believe that if the court was the plain text of the law, if they follow their clear precedent on the idea that you read a law in its entirety and its context, as a justice kagan made strong points about the need to read the line context, it is clear that tax credits are available to all americans, no matter which exchange, no matter which entity runs the exchange in the state. with all members of congress in the audience. they know very well what they wrote. they indicated to the court that everyone at the time understood the law to allow for tax court is whether or not the state or federal government facilitate exchanges. even opponents on the law -- paul ryan was in the audience today. he said there wasn't any difference between state and federal run it stages at the time of enactment, and what your matter -- and what mattered was income eligibility. we believe it was a great day for the government. we are very confident in the results. >> we want to pick on one point elizabeth said. mr. verrilli made a point when he said that these were passed in the middle of the night, they have been debated for months openly in committee. not a single member of congress adopted or said a word about what these challenges are saying today. this is a novel interpretation discovered as justice kagan said, a gear and a half after the law was actually enacted. it is not something congress had in mind at the time of the act. >> i think it goes to the absurd interpretation that the petitioners are asking court to adopt. it and he makes no sense of the congress would have written a lot to coerce the state when they are potentially try to give them a choice. and also that they would course the states to say that no one understood -- it is not a very good threat if you don't actually articulate the threat and no one understands if there's a threat be made until a year and a half later. someone comes up with some litigation strategy to make that point. i was very heartened by his taking seriously the concern to the and ballast and state-federal relationship with that would result by the petitioner. >> if your interpretation is adopted, wanted that really constitutionally course the states? more heartening was become a nation of justice kennedy's question right against justice kagan's question which is if, as was try to course of the states, why would they do it in this obscure provision about coverage? that is not the way to do it. it really does look like a gotcha game that the challengers have brought today with no gotcha ultimately at the end. >> but they from your point of view [indiscernible] i am the lawyer, so i will not get into that. >> we do have studies showing there will be substantial disruption to the health care market as a whole. economists have filed brief that there will be a desk by resulting. -- a death spiral resulting. it is beyond belief to think that this commerce would do some thing to fix it. the idea that costs would rise and people would be uninsured -- we have experts filing briefs on this matter. literally quantifying the number of people who could lose their lives as a result of losing coverage if the tax credits are taking away. >> but they wouldn't be taken away. >> you will have to read the expert race with economists and those experts who weighed in with the court. anybody who literally has a stake in the health care system -- doctors, patients, nurses insurance companies hospitals have filed in support of the government's position in this case and support of the availability of tax credits. they filed a brief in this case with the opening line saying the health insurance of nine million americans plus are at stake in this case, all potentially taken away. these are people who have never had insurance before, many have never had insurance before, for the first time they've been able to have it under the affordable care act and if this novel interpretation by the challengers is accepted by the supreme court, it's going to be devastating for the consequences to americans and their health. >> my name is elizabeth wydra. we do have an expert who can speak shortly about the death spiral consequences. >> my name is elizabeth wydra. i represent the members of congress and state legislators who filed a brief in support of the administration. i work with the constitutional accountability center. >> i'm dr. emanuel. i happen to be on the brief with the economists. let's just explain the death spiral scenario. imagine that you have 11 million people now in the exchanges losing their subsidies and you have the simultaneous requirement that you cannot exclude people or you have to sell insurance to people who have pre-existing conditions who are likely to be more expensive. the healthy people who are getting subsidies, who will no longer be getting subsidies will stop buying insurance. you're going to concentrate the people who are buying insurance as those people who have pre-existing conditions and are likely to have high medical bills and will drive up the premium for insurance. more people will exit the marget -- the market because the premium will be too expensive for them and you will then again raise the premium because you'll have very sick people buying insurance policy. the consequence is an unsustainable market. this is why the insurance industry does not oppose -- opposes this position. it will kill the insurance market without the states, without a state-based exchange. it is very destabilizing. it's been well established because no exchange worked without subsidies before. we tried exchanges before. and they would not work. and i think as correctly put by solicitor general birelli, the federal exchanges then would basically be a shell game. they wouldn't -- they'd be a shadow exchange no one would guy and no one would sell on those exchanges. >> what would be the ripple effect in other states? >> probably not. insurance is done state by state. they would be relatively insulated but you're talking about 34 states in the majority of the united states. >> despite the fact that many insurance companies and hospitals are multistate or interstate corporations, again it wouldn't affect -- >> well, you can still have insurance in states and a lot of states have players that are only in their state. a lot of blue cross and blue shield plans, for example are state-based. but it would, the insurance companies are very, very nervous about this because it would totally destabilize the system. let me make one more point. one of the reasons congress can't easily solve this problem the way justice scalia suggested is there is a big scoring issue. you would have to find about $350 billion to actually remedy the problem based on the way the congressional budget office scores this. and there is no way of finding $350 billion to solve this problem. it is a very difficult problem. not trivial as justice scalia suggested, they can just pass a law and say the federal exchange works in the state. there's a huge cost to that monetarily because suddenly if the subsidies aren't part of the affordable care act, you have to find the money to pay for these new subsidies in a new way. >> what's your first name? >> ezekiel emanuel. >> what did you think -- >> i thought the government did an extraordinary job. i agree with neil, i think don birelli was forceful in this and provided a coherent explanation for why the interpretation they're offering is the right one. thank you very much. >> you would argue it is a matter of semantics? >> it is a matter of semantics. as established by the state seems to be the hitching language in the case, but there is nothing else in the framework i would suggest that it was meant to the -- >> -- >> i thought -- i read the briefs i saw. i thought the solicitor general did a very good job refuting every step along the way why this could not have ever been the intent. particularly the notice provision got a fair shot. over the three years, there was never a sense if you don't do this state. >> you had these conversations with governors -- >> no, i said we had conversations with governors starting day one when the lowest past. -- when the law was passed. no one ever suggested that only a state could establish a sustained -- ace exchange. >> i felt confident about that too. i think this congress that passed the bill in 2010 intended for a national program. nationally insurance companies have to play by different rules. nationally there is an individual responsibility. doesn't say only if you choose to set up your exchange that these things happen. the other pieces would stay in place and the rest will fall back. i really have to go. >> next, a discussion about the operation of the affordable care act and the possible impact of a supreme court decision. after that, president obama holding a town hall meeting with college students in south carolina. then another chance to hear the supreme court oral argument in king v. burwell over the constitutionality of the health care law. and the former new york city police officer eugene o'donnell talks about the white house task force on the 21st century policing and it recommendations for improving relations between police department and community members. will be taking your calls so you can join the conversation on facebook and on twitter. washington journal -- live at 7 a.m. eastern on c-span. >> here are some of our featured programs this weekend on the c-span network. on c-span2 book d saturday night at 10:00 eastern. former marine and war correspondent david morris on the history of ptsd that affects over 27 million americans including himself. sunday night at 8:00, former navy seal sniper scott hitler argues that the -- scott taylor argues that the obama demonstration is hurting our nation. the commemoration of bloody sunday when voters rights advocates began in march from selma to alabama, and were met with violence by state and local police. on saturday at noon eastern, we will be live in selma with commentary by president obama and john lewis. sunday, our coverage continues from the historic brown chapel church the starting point for the selma marches. find our complete schedule at c-span.org and let us know what you think about the program you're watching. you must -- e-mail us at commen ts@cspan.org. like us on facebook, follow us on twitter. >> next, a discussion posted by the alliance for health reform on the affordable care act. panelist analyze the expansion of medicaid, enrollment in health insurance marketplaces, and what may come out of the king v. burwell supreme court decision on health insurance subsidies. this is about one hour and a half. >> good afternoon. my name is ed howard, i'm with the alliance for health reform. i want to welcome you on behalf of senator cardin, our board of directors to today's program on the affordable care act. the aca. we are joined in bringing you this program by the kaiser family foundation, one of america's most trusted voices in health policy. i want to give you a special thanks for braving the elements and the travel uncertainties to get here. if you have decided that staying home was the better value and you are watching on c-span welcome to you too. glad you're safe. early in every new congress in recent years anyway, the kaiser family foundation and the alliance have partnered to sponsor a series of briefings for hill staff and others on some of the most important health policy topics that are the center of debate here in congress and for those of you trying to convey their views on these topics as well. after today's -- excuse me, after today's reading on the affordable care act we will be conducting three more of these primers. they will be held not friday but the two friday's following. on wednesday, april 1, on medicaid medicare, and health care costs respectively. mark your calendars, we will see you back here. as for today's program one might ask why there's a need for a primer on why there's a law short of five weeks old, and has been in the spotlight virtually every day from the day it was signed into law. at least two fairly large reasons. one is that this is a couple kids law. with lot -- a couple katy law with lots of different provisions. -- a complicated law with lots of different provisions. many of those provisions have changed since its enactment. secondly, bright people come and go. they sometimes come back here on the hill. even when they stay, their duties shift. all of a sudden instead of the usda, they need to understand something else. we are hoping to help you understand the new language. we will take into the affordable care act. that is patient protection and a formal care act, to be proper. sketching out the main parts of the law the ones you need to know about. we will not give you arguments for or against either the provisions or the law in its totality, but we want you to be better informed about what the law actually says. debriefing comes at a timely juncture. it we just concluded the second perelman. -- second enrollment period. we heard oral or commit this week on a case that could radically reshape the scope of the aca, maybe even threaten its continued existence. we are pleased to have as i mentioned, a cosponsor of today's briefing, the kaiser family foundation, a source for tons of good information about the aca and dozens of other health policy topics. and co-muttering with me today is ryan rowland -- diana r owland, and herself, one of the leading policy experts in the country. diane> >> thank you ed, and welcome to all of you. i want to share my appreciation for braving the weather. we were not sure whether the audience would have to be by a media as opposed to any present. we welcome you today. i wanted to emphasize the point of this is the basics. >> thank you diane. just a little bit of housekeeping before we get started. if you are in the mood to tweet you can see the hasthtag aca101 on the screen. feel free to make use of it. in your packets, you'll find important information, including speaker bios --- >> you may know that one of -- her flight got canceled, and her flight this morning was delayed. since charlene was scheduled to cover the aca's changes to medicaid and chip we are very lucky that we have on the dais, one of america's most former experts, diane rowland, to be in addition to her position, has been on the medicaid and chip access commission. she has graciously building for charlene. will be a video recording for this briefing available monday or tuesday on the kaiser website kff.org. thanks very much to the foundation for taking care of that very important aspect of our work. a few days later, there will be a transcript you can look at on the alliance website. allhealth.org. those of you watching on c-span you may, if you have access to a computer, go to allhealth.org. it has all of the speaker presentations, you can follow along as we go. for those of you in the room you can go back to materials all of the presentation, and as i mentioned, the biographical sketches as well. at the appropriate time, those of you in the room can ask our panel a question by filling in the green question card and it will be brought forward, or you can go to one of the microphones and ask it. orally -- ask it orally. at the end of the briefing there is an evaluation form we would appreciate if you filled out so that we can improve these briefings and respond to your needs as well. we have a great panel, and we are very pleased to start with jennifer. she is the director of state health reform at kaiser family foundation. and an associate director of the kaiser commission on medicaid and the uninsured. as such, she has been paying close attention to how states are implementing the aca, and we have asked her to lay out a major provisions of the law with an emphasis on its coverage provisions. jen, thanks for joining us today. thanks and thanks to you all for coming. it's a pleasure to be here. i'm going to start with just a broad overview of the main coverage provisions of the law and my fellow panelists will dig a little deeper on each of these issues. starting off. one of the main goals of the aca is to expand coverage to the uninsured and to improve the quality of coverage for those with private insurance. it does this by building on the base of our current system which is supported primarily

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